At the eighth annual South West Tennessee Development District (SWTDD) Legislative Luncheon held January 3, one of the topics discussed by the gubernatorial candidates in attendance is the need for an additional $72 million to address infrastructure at the Memphis Regional Megasite.
The Memphis Regional Megasite is a 4,100-acre state-owned manufacturing site located between Jackson and Memphis off I-40. The site was acquired by the state in 2009 according to the Tennessee Economic and Community Development (TNECD) website, has had investments of more than $106 million, although other reports indicate tax payer investments of as much as $144 million.
TNECD Commissioner, Bob Rolfe, named to the position on February 16, 2017, following the departure of former TNECD Commissioner turned gubernatorial candidate Randy Boyd, recently said another $72 million would be needed to complete infrastructure projects that would make the site “shovel ready.”
Five gubernatorial candidates were represented at the SWTDD luncheon: Republicans Mae Beavers, Diane Black and Bill Lee as well as Democrat Craig Fitzhugh and Karl Dean’s campaign manager, Courtney Wheeler. Republican candidates Randy Boyd, Beth Harwell and Kay White did not attend.
Four of the five candidates agreed that the $72 million additional investment needs to be made. As reported by the USA Today Network – Tennessee, Democrat Craig Fitzhugh has supported the Megasite from the beginning and, frustrated by the lack of progress, he said if he is elected governor not only will the megasite be finished, jobs will be put in it.
Democrat Karl Dean’s campaign manager, speaking on behalf of the former Nashville mayor, said the candidate considers the Megasite a priority.
Republican Bill Lee expressed concern about the level of funds committed to West Tennessee as compared to East and Middle Tennessee, and said, “I’ve come to believe there is going to have to be a dedicated commitment to the prosperity of this region if we actually want Tennessee to lead the nation economically.”
Surprised that the Megasite is still not shovel ready, Republican Diane Black is committed to completing the project even if it cost more than $72 million. “Let’s not waste anymore money; let’s get this done,” Black was quoted, adding, “Let’s get some of the work done, so we can get someone in here. It may take more than $72 million, but I’m going to commit to you today that if I’m the next governor of this state, that Megasite will be completed so we can attract more businesses in this state, so we can (bring) economic development back in an area that is critical and needs it.”
The lone dissenter, Republican Mae Beavers, called for the ECD to be held accountable regarding the Megasite. Beavers was quoted as saying “When ECD recommends we invest in something like the Megasite, they need to know what they’re doing,” continuing, “They need to know it’s not going to be shovel-ready. They need to know that sewers were lacking. That’s why it’s not shovel-ready. We need more accountability at the state level when we make these investments.”
The infrastructure and other obstacles in achieving the Megasite’s perceived potential were identified in an October 2016 Performance Audit Report of the Department of Economic and Community Development and Tennessee Technology Development Corporation conducted by the state’s Comptroller which included a review of the Memphis Megasite.
The audit report indicates that the state’s investment as of February 2016 was just $89.1 million and that the property was still one year and undefined additional costs away from TNECD’s goal to have the Megasite infrastructure within an 18-month window from the time an agreement was reached with a tenant.
TNECD has been actively marketing the site, including videos on the website and a trip to Asia, but has also identified several obstacles to obtaining an industrial tenant: the size at 4,100 acres may be too large for a single tenant; the region, being predominantly rural, has less infrastructure and fewer amenities; objections by environmentalists and local residents about discharging treated wastewater into the Hatchie River driving the state to work on a wastewater solution; concerns about the availability of a skilled labor force; the potential for a tenant to draw the labor force away from existing industry; and, increased commuting by employees which could require ozone monitoring.
The development of the Megasite could lower unemployment and create growth in the Haywood County area, identified as an at-risk county by Rural Development with one of the lower per capita incomes. However, economists consider an unemployment rate below 5 percent as “full employment,” and even though the Memphis metropolitan area holds the state’s highest unemployment rate, at 3.9 percent it is still well below the “full employment” level.
It is also likely that additional taxpayer dollars beyond the stated $72 million will be required as “incentives” to lure any prospective tenants through tax relief or grant programs such as FastTrack.
The Megasite itself, TNECDs incentive programs and the recent business tax cuts in the IMPROVE Act are all geared toward large companies, which is curious when about half of all jobs come from small businesses. And, in fact, “For the 12th straight month, Tennessee ranks No. 1 in the country for small business job growth, according to @Paychex,” boasted a TNECD tweet on January 4, 2018.
In its first documentary, “Rigged: The Injustice of Corporate Welfare,” Beacon Center of Tennessee CEO Justin Owen reports, “The reality is that 98 percent of the jobs created here in Tennessee are created by existing homegrown Tennessee businesses. Yet we give almost all of the handouts to the other 2 percent. So for us, that’s really the problem. We’re punishing the 98 percent in order to reap reward on reward on the 2 percent.”
To date, Governor Haslam has not revealed whether he supports the request for an additional $72 million for the Memphis Regional Megasite. In his budget that will be released later this month, Governor Haslam will be forced to decide whether to increase the total taxpayer investment to the Megasite’s infrastructure by another 50 to 70 percent.